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Best Financial Advice That You Got From Your Parents

I still remember those long talks from my parents that I used to get about being financially responsible. From teenage years onwards my parents were always trying to instill money management principles into me and my siblings. Now whether or not we took that advice was totally up to us. I realize now that following my parents advice would have saved me from many financial pitfalls. But hindsight is 20/20, and sometimes it takes falling on your face a few times to learn about life and about money. Here are 4 financial principles that I wish I had followed sooner:

1. Stay away from credit cards in college.

Credit card debt for most Americans begins in college. Parents will warn you to avoid charging up credit card debt in college, but many college kids don’t listen. Credit card companies prey on college students that are strapped for cash by offering them large amounts of credit at low introductory interest rates. Speaking from experience, it is so easy to rack up a big credit card bill during your college years. A couple pizzas, a few pairs of jeans, a new cellphone, and a few nights of entertainment can have you owing a thousand dollars or more. Take my advice. Avoid credit cards like the plague in college. It can take you years to pay off a few reckless expenses.

2. Buy a place instead of renting one (after living at home a little longer).

The first thing that most students do after graduating from college is move out of their parents home. It may represent independence but this isn’t always the best financial decision. Instead of paying years of rent with nothing to show for it, you can save that cash. You could easily save up $15,000 or more by living home for one extra year. The money could be used as a down payment on your new home. A year or two of sacrificing can start you on the road to home ownership. This, of course, is assuming that your parents will take you back!

3. Take the job that you love that pays less.

Before you start scratching your head over this one, let me explain. I am not suggesting that you work for peanuts, but I am suggesting that you pick a job that offers fulfillment. Too many people base their employment decisions on the job that pays the most. This is an unwise decision. If you are considering between a job that you really don’t like that pays $5,000 more and a job that you like that pays less, go with the job you love. If you love what you do, you are more likely to devote more time, energy, and effort to your career. You will also be more motivated to try and get promoted. The short-term hit to your wallet will be worth it in the long run. The worst feeling in the world is waking up every morning dreading having to go to work that day.

4. Save early and save often.

Let’s face it. Saving money is just not exciting. It’s far more exciting to spend money than to save it. Buying a new PS3 system, a pair of designer shades, or a flat screen television is a major adrenaline rush and impressive to your friends. While it’s a good feeling for a little while, it can also create a long term financial problem. How many people think about saving for their retirement in their early 20’s? The answer is not enough. Start socking away money in your 401(k) as soon as you get your first job. The earlier that you start saving, the less money that you will need to save and the less stressed you need to be down the road about saving money.

Was there any financial advice that your parents gave you that you wish you had taken sooner?

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Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, Your Financial Playbook.

Kris

Work hard. Not that I haven’t always worked hard, but I worked hard on my terms. Now I just work hard, regardless.

Olivia

Great counsel. Sadly my parents were terrible money managers and never talked to us kids. We found out through experience, and are now teaching our own kids. Someone once said, “if you can’t a good example, at least you can be a warning”.

http://findingserenity2010.wordpress.com/ Serena

I agree with Olivia. I used to listen to my parents fight about money when I was growing up (and when I moved away to college, I got away from it!)and only learned that my mom can’t have a credit card … but I never got much good advice from them. I’ve learned the hard way that financial responsibility takes a lot of work!

Kira

My father told me to have an “oh sh*t” fund – money for absolute emergencies. My ING emergency savings account is still called this.

http://www.athriftypenny.blogspot.com Cricket

During my first month of college my Dad signed me up for my 1st credit card through USAA with a whopping $500 credit limit. It wasn’t the “this is only for emergencies” talk he gave that made me be careful with using it. He actually sat me down with a calculator and showed me how to compute interest. He showed me what would happen if I maxed it out and then paid it off $15 at a time with interest. It was something like 3 or 4 YEARS and about $800 to pay off the original $500. The math said it all for me- I didn’t want to pay $8 for a value meal that was only supposed to cost $5.

http://buylikebuffett.com/ Mark Riddix

Great comments everyone. It appears that we all learned something from our parents about money.

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